LUXEMBOURG Law and Practice Contributed by: Michiel Boeren, Jeronimo Charvarria, Maxime Grosjean and Gauthier Mary, Tiberghien
• Tax fraud ( escroquerie fiscale ) is punishable by imprisonment ranging from one month to five years and a fine ranging from EUR25,000 to up to ten times the amount of evaded taxes (or unduly obtained refund). The Luxembourg tax authorities qualify tax evasion involving amounts greater than EUR200,000, imply - ing the use of fraudulent manoeuvres, as tax fraud. Criminal tax offences identified by the tax authorities are referred to the judicial authorities for prosecution. 6.3 Interaction Between Tax and Criminal Procedures The tax and judicial authorities co-operate with each other through an inter-administrative and judicial co- operation mechanism. This co-operation notably involves the tax authorities being obliged to: • provide information to the judicial authorities and to the Financial Intelligence Unit (CRF) upon their request; and • notify the State Prosecutor whenever criminal tax offences (eg, aggravated tax evasion or tax fraud) and other crimes or offences are identified during the taxation procedure (including anti-money laun - dering crimes or offences). This co-operation is mutual, in that the judicial authori - ties and the CRF must also communicate any informa - tion that could help to accurately impose taxes. 7. Administrative Co-Operation 7.1 Legal Framework for Administrative Co- Operation In Luxembourg, administrative co-operation in tax matters is based on specific legislation, which often implements EU directives and multilateral/bilateral treaties. Luxembourg Laws • Luxembourg laws implementing the EU Directives on administrative co-operation (DAC): DAC1 to DAC7 (DAC2 for CRS) and DAC9 have been imple - mented either through the general law on adminis - trative co-operation or through dedicated legisla -
tion. This includes the exchange of rulings (DAC3), the CbCR (DAC4) and the Mandatory Disclosure Rules (DAC6). • DAC8 has not yet been implemented. A draft law is pending in Parliament. • Luxembourg has implemented EU Directive 2010/24/EU on the mutual assistance in the recov - ery of tax claims. Main Conventions • Multilateral Convention on Mutual Administrative Assistance in Tax Matters. • Bilateral tax treaties concluded by Luxembourg generally include an exchange of information provi - sion based on the OECD Model Convention (Article 26). • Benelux Agreement on Cooperation between Administrative and Judicial Authorities. • Agreement with the US regarding FATCA. 7.2 Exchange of Information Clauses in Tax Agreements The tax treaties concluded by Luxembourg provide for the exchange of any information that is foresee - ably relevant for applying the treaty or domestic laws between the competent authorities. In line with the OECD Commentary, this encompasses exchange on request, spontaneous exchange and automatic exchange, depending on the relevant tax treaty. 7.3 Other Forms of International Tax Collaboration Luxembourg participates in: • the OECD’s International Compliance Assurance Programme (ICAP), which facilitates collaboration between multinational enterprises (MNEs) and tax administrations in a co-operative risk assessment process; and • the European Trust and Cooperation Approach (ETACA) – Pilot 2, a European Commission initiative that fosters multilateral co-operation and preventa - tive risk assessment among EU member states. A legal framework for joint tax audits, as introduced under DAC7, has also been implemented in Luxem - bourg’s domestic law. This creates a legal basis for
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